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No change in USA main indexes from yesterday: DIA pausing at the FebR1 (neutral), QQQ soaring above Q1R2 (bullish), and IWM below FebP (bearish).
Yet TLT busted a move with a breakaway gap above its FebP. Two safe havens TLT and GLD are showing strength. USA indexes (excepting QQQ) have been just above sideways for months now, but the scale is tilting in favor of breakdown before continuing significantly higher.
SPY, DIA, QQQ, IWM and TLT below.
A few minor changes to pivot status that seem to balance out. DIA tried to clear FebR1 but didn't, yet closed so near the level that I cannot call it a rejection. QQQ lifted above Q1R2 which is a sign of strength; but IWM closed a bit under the FebP. If Wednesday opens with stocks lower, TLT up, VIX up, etc, then IWM is a first choice hedge below the FebP while allowing for other exit decisions later.
No change to VIX and XIV; TLT managed to close slightly above FebP so that is a level to watch tomorrow.
The notable move was in oil as hinted in the last Total market view: "Interesting that oil hasn't benefited despite $USD weakness." In other words, if oil could not rally with DXY down then DXY stabilization would probably mean oil lower.
SPY and IWM below.
No change in USA main indexes or VIX / XIV. IWM could have broken FebP, but held. The only asset suggesting caution is GLD, jumping convincingly above all pivots today after a fractional close above on 2/3.
SPY, IWM and GLD below.
No sugar coating, I was just wrong to reduce and be underweight. Even though IWM, XLF and DIA were under Feb pivots, VIX was entirely below its monthly pivot and again has been right on the market.
All USA mains opened above all pivots and did not look back. The case for underweight was 2 of 5 USA mains below these levels, but buying back long meant paying up. Back in DIA and XLF for 100% but I just cannot bring myself to add leverage with VIX in 10s. Maybe I should though! Any doubt of Trump rally is seeming rather silly at this point.
A lot more coming up this weekend on the blog.
SPY, DIA and VIX Below.
Mixed day for USA indexes: SPY & VTI held FebP, but DIA and IWM are below. QQQ is well above but again trouble at the Q1R2 level. VIX and XIV are not really helping settle things; VIX below all pivots, but XIV back under Q1R2 as well.
DXY, EUR, GLD are all at very interesting points. DXY tested at held its YP as support, as EURUSD tested and rejected its YP as resistance. GLD could have cleared its 1HP to regain status of above all pivots but didn't. Any follow through by DXY back above 1HP of 99.97 would be very bullish.
SPY, DIA and DXY below.
Due to movement structure, RSIs, pivots and VIX, I think we will probably see FebS1s instead of R1s on USA main indexes. But I didn't aggressively exit last week and instead decided to reduce if pivots proved my medium term bearish bias correct.
SPY and VTI holding FebPs thus far, though ES breaking after hours. DIA & IWM fractionally below FebPs. Tech and sector SMH still the USA leaders this year.
VIX looks ready to move significantly higher.
Hopefully I won't get chopped up as with IWM last month, but I'd rather be less long here. Taking 2 DIA gains off leaves 70%. Seems right. With all USA mains above Q1Ps, 1HPs and YPs, I think the lowest exposure should be 50%.
In spite of my bearish opinion of gold (why have the hassle of bullion when there is bitcoin?), I am forced to admit that GLD looks like a decent buy setup with a lift off from the YP and Q1P combo and a rising D20MA helping out. I am not counting this in the exposure system however.
SPY, ES, DIA and GLD below.
Not much change to USA main indexes, VIX and XIV.
And yet as we head into February, USA indexes excepting QQQ have been mostly above pivots since 11/8-9. This is a quite a run, and even strong trends will test monthly S1s or S2s from time to time. Given monthly chart configurations and where the FebPs are likely to be, I think this is the most likely scenario ahead.
Unfortunately the software doesn't list the next pivots until bar opens, so check back tomorrow for the new FebPs on the ETFs. ES and YM have opened and are close to testing levels, so I've included these charts below.
Amazingly XIV rallied back to close above YR1 again. Can't be too bearish on stocks with VIX low and XIV strong.
DXY testing last chance support at the YP! And correspondingly GLD knocking on 1HP again, and if above that it will be above all pivots.
SPY, ES, YM, XIV DXY and GLD below.
The market could have been worse today, as 4 of 5 USA main indexes remain above all pivots, VIX below all pivots and XIV somehow rallied back to close above YR1. But regardless of what happens tomorrow I think this is likely start of something larger - c'mon, USA indexes are pushing the monthly Bollinger bands and VIX was just in the 10s.
Out of 2 IWM takes portfolio down to 90%, and there may be more reductions soon. I think better to reduce here rather than hedge to free up capital for the next good setups.
SPY, IWM and XIV below.
2016 Q4 winners IWM and XLF continue to lag, but otherwise markets are doing fine. Thankfully recent rotations into SMH semi-conductors and RSX Russia are helping making up for the laggers.
A lot more coming up the weekend on the blog.
SPY, SMH and RSX below.
Some selling today, and there are a few levels in play: DIA JanR1 and QQQ Q1R2.
In addition, TLT managed to hold JanP as support.
That said I think this is first reaction on a headline and willing to give bulls the benefit of the doubt and another day. At this point, VIX into the 9s seems just as likely and above a monthly pivot.
Interesting action in DXY, which tested 2HP for 4 trading days and recovering Q1P as I type. Further dollar strength would undo the global market rallies we have seen in 2017 thus far and sink gold.
SPY, QQQ, DIA and DXY below.
What an amazing risk-on move. Everything including global stocks powering up, TLT back under all pivots (slightly) and GLD back under YP as VIX approaches the lows of this decade.
SPY above JanR1 and not near any other level
DIA approaching JanR1
QQQ soaring, above 2HR1 and soon reaching Q1R2 (!)
IWM still under JanR1
VTI very healthy, like SPY above JanR1 and not at major resistance
Typically this is not what tops look like. In other words, we should have most USA mains on levels for a significant top. This means higher.
Portfolio is 100% and yesterday I resisted leverage with GLD above its YP. Judgment call to put it on today, but XLF was one of the big winners in Q4 and I took gains on 2/3 of that on the reduction. Paying up a bit but +1 means 110% and if gold recovers YP then we can think what to exit.
SPY below.
PS: For the E-wave folks, this does look like classic W5 from 11/2 lows in process.
Wow, I have been wrong on my recent expectations - just yesterday thought IWM below JanP again would lead markets lower, at least to a test of DIA JanP. Obviously off. I also thought XIV would face resistance on first tag of YR1 and it closed above - amazing!
Portfolio slight underweight hurt a bit today, but if we took an IWM off because of two closes below JanP it would make logical sense to quickly put 1 back on with the jump above. The rabid bull may be making a serious charge, but I don't like leverage here for a few reasons: 1, 3 of 5 USA mains on pivot resistance today; 2, monthly Bollinger bands and 3, VIX at 11.07 is not the place to pile in extra long. Still, if we add back the IWM that is 10 or 100% long.
SPY on JanR1, VTI and JanR1 and QQQ at 1HR1, the first main index to reach long term resistance.
SPY, QQQ, IWM, XIV below.
No change to USA mains - 4 of 5 above all pivots, and IWM below the JanP. Not that bad.
The significant movement today was in DXY and thus gold and global indexes - DXY below Q1P for the 2nd time, and now testing 1HP. This is the first test of long term support since the definitive clear 10/6-10 2016.
The latest Total market view said would reduce IWM if below the JanP again, down to 8 longs. Still holding on to SMH. RSX looks like the best setup for global indexes, valid above the JanP, so adding a long there. May short INDA soon.
Readers know I have been largely bullish on the market for months, and I still believe in higher targets - but if guessing next move up or down, I'm thinking down. But the opportunity cost to hold most positions here is not that much; if another USA index or sector breaks a pivot then that will be the signal to reduce. My opinion could be wrong and markets could be up decently tomorrow.
SPY, IWM, RSX below.
Mostly bullish, but trouble to go higher - basic theme of 2017 (except Tech set, global indexes, and gold).
Often weak up is the prelude to a drop, and the SPY weekly chart has two small up bars - inviting selling. But VIX and XIV tend to be right on markets and they look fine right now.
I will try to sort out more on the blog this weekend, but there may be limited posting compared to usual.
A mild decline on Thursday that looks like more that it is due to recent tight range. IWM broke its JanP for the second time, and 2nd breaks of often definitive. However, DIA is above its JanP and VIX had a near tag and dropped from the level.
Though I recommended reduction of risk to start the week (and glad I did so especially XLF), I think the more likely move from here is continuation of larger trend and move back up to top of the range (although we could easily see more sideways before that happens). Simply stated 4 of 5 USA mains above all pivots and VIX below - stay bullish. That said, with GLD above its YP I think 'mostly long' ie not 100% or above is the right approach.
All USA main indexes back above all pivots today as IWM recovered its JanP, so that's bullish. But VIX and XIV look a bit more threatening.
Safe havens TLT and GLD dropped too as DXY held Q1P support. I'll be watching the GLD YP!
Tech is doing well in Q1 thus far and I'm not sure cutting XBI was right move. Regardless portfolio could have more tech so to add a bit going with 2016 sector leader SMH with a small add up to 90% long. It turned out a mistake to reduce last year, although trimming on other winners IWM and XLF would have been right. I think this shows the strength of SMH / semiconductors that it hasn't had much selling pressure despite the gains of 2016.
SPY, IWM, GLD and SMH below.
From the most recent Total market view - Bottom line: "Based on GLD, VIX and XIV and other technicals I am ready to take some gains off the table, but will still be willing to hold long if GLD YP gets clearly rejected next week."
So that was pretty clear with big gap up in GLD to take some off the table. Next question is what? XBI most recent add already one big drop and failing at weekly 100MA; then pretty easy 1 XLF and 1 IWM, the laggers of 2017 thus far. This made 90% long. Then XLF first to break under its JanP so so taking another off there.
But with VIX and XIV fine and all other indexes above pivots, below 80% seems a bit too bearish. Ready to add one back on IWM with a move above its JanP.
SPY, GLD, VIX, IWM and XLF below.
SPY back up near top end of range. A lot more coming up on the blog.
Nice save by IWM to hold the JanP. All USA main indexes remain above all pivots. No change in safe haven status. Portfolio remains the same.
SPY, IWM and GLD below.
No change to USA main indexes - above all pivots and not as resistance yet. QQQ is above its Q1R1 which is bullish, as is XIV. VIX is low but healthy and below JanS1. All this is bullish for the market.
But alas, lost gains on biotechs. Holding with breakeven stop; no reason to lose money on a leveraged long that had gains.
GLD is testing its Q1P & YP cluster at 114.02 and 114.41 respectively. Whether or not you choose to short, I believe the situation is more bullish for stocks if this area gets rejected.
SPY, XBI, GLD below.